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Training is the Key to Customers' F&I Jitters: Spinella

We've all heard of the phenomenon by one name or another... the dreaded “F&I jitters.” What's the source of this infamous shopping-process nervousness felt by consumers? And what is the solution?

“People like buying a new vehicle. They just hate paying for it,” said Art Spinella of CNW Marketing/Research in the current issue of F&I Extra Training Supplement, supplement to the October/November 2003 issue of F&I Management and Technology Magazine. “New-car buyers/lessees are on an emotional high – up to this point,” Spinella explained. “They have their heart set on a major, largely emotional acquisition. Now comes the realization they are going to be called upon to pay for it. And the obligation will be measured in years.”

According to Spinella, the F&I process scores a dismally low 5.8 on a 10 point scale in the most recent survey (anything below 6.5 is miserable at best.) And that’s the GOOD news. "Thanks to a couple of major automakers developing or implementing third-party training programs, the F&I score is up more than two full points from where it was in 1995,” Spinella said.

According to Spinella, "The impact of satisfaction in the finance and insurance department can’t be stressed enough in terms of what it means for repeat business. In an evaluation of more than 340,000 dealer-customer records, what we see is a solid correlation between F&I satisfaction scores and repeat business. The higher the satisfaction, the more likely the customer is to recommend the dealership (and the brand) to a friend or relative after a year of ownership.”

The F&I Department is a daunting place, according to Spinella. Most consumers feel they are lacking in knowledge and expertise to “face off against” the all-knowing, wily F&I guy.

Customers know they need answers to questions and direction about how to best pay for this major financial obligation. They may have considered leasing, using money from their savings account or investments, or decided to pay for the vehicle with a conventional finance agreement either through the dealership or their own bank or credit union.

"They are going to face the finance & insurance manager where the dream of driving a new vehicle turns into a major monthly payment," Spinella pointed out.

Training is the Key

According to Spinella, the answer to customers' F&I jitters is training, training, training.

Among F&I managers who have received some formal training, the scores are significantly higher than those with no formal training, according to Spinella.

One such benefit of training is the improvement that can be found in the ability of F&I managers to explain the finance contract, Spinella said. "In the 1990s, most consumers had trouble understanding the terms and conditions of lease and finance contracts," Spinella pointed out. "With the explosion of Internet knowledge bases and newspaper and magazine columns devoted to personal finances, the general knowledge of what is contained in the 'fine print' has greatly improved."

Add to that a concerted effort on the part of some automakers to streamline their contracts and F&I managers becoming more aware of the legal concerns surrounding a misunderstood lease or finance contract, and a better understanding of those contracts was not only likely but necessary, according to Spinella.

In this most recent study, new-vehicle buyers give a healthy 7.5 (on a 10-point scale) to the manager’s explanation of the finance contract, up nearly 34 percent from the 1997 score. There was a dramatic improvement among trained staffs.

"Not surprisingly, as customers feel comfortable with the explanation of what was previously a verbal nightmare and the ability of the manager to explain it, they begin to trust the F&I manager that much more," Spinella said.

"The trained staff has a significantly higher rating from new-vehicle customers than the industry has overall," Spinella said. "And with this trust will come repeat business -- or, at least, greater numbers of recommendations to friends and relatives."